- Summary:
- OPEC + alliance could hold the key to short-term crude oil price direction, and Wells Fargo analysts believe that the cartel may keep production curbs.
Crude oil price retained bearish bias this Tuesday as the OPEC + alliance deferred its decision to lift production curbs by 2 million barrels per day or not come January 2021.
Analysts at Wells Fargo Investment Institute think that OPEC + will keep the limits in place beyond January 2021. The thinking is that the alliance would not want to lose market rebalancing gains.
However, Wells Fargo analysts see some considerable headwinds in crude oil prices despite the possible launch of coronavirus vaccines. As they put it, “vaccine developments do little to help current demand.” A decision to remove production curbs may overwhelm any vaccine-related gains.
Technical Levels to Watch
The daily chart on Brent crude shows a consolidation area seen in a bullish flag pattern. If OPEC + votes to retain the production curbs tomorrow, and crude oil inventories show a shortfall, we may see a break of the flag, with short term bullishness that attracts bids at the current price. This could send crude oil price on the Brent crude benchmark towards 50.64 after 48.33 has given way.
On the flip side, a vote to remove curbs and add more production volume to the market from January could pressurize crude oil prices, causing 46.41 to give way and bringing 44.16 or 42.50 into the mix. 41.43 and 40.22 remain viable downside targets if this outlook holds sway.
Brent Crude Oil Price (Daily)
